Management vs Labor: Guess Who's Still Winning?

Remember Warren Buffett's comment about class warfare, that "there's been class warfare going on for the last 20 years, and my class has won"? (CNN interview, 30 Sept 2011)

Not only does his class have, as he called it, the nuclear bomb, but some of his fellow members are preparing to drop that bomb.

Salon magazine reported last week that a Florida owner of some 40 Denny's restaurants has announced that he will "cut workers' hours in advance of Obamacare's full implementation in January 2014."

Salon reporter Natasha Lennard wrote that a recent survey found that the Affordable Care Act is expected to raise large businesses' costs by approximately 4%. Metz reportedly considered adding a 5% surcharge to restaurant prices, but "has no plans to implement this idea."

Metz knows that his decision will "force my employees to go out and get a second job", but felt that he had "no choice."

I have several choices to suggest to him. Most aren't printable.

To be fair to Denny's, Metz is not Denny's. He owns 40 of their restaurants, but Denny's opened its 1,600th restaurant in September 2010. Franchisees must maintain certain standards if they wish to retain their franchises. Should Denny's corporate decide that Metz is risking Denny's good name, they will take action.

Sadly, Mr. Metz is not alone in his greed and insensitivity. Other restaurant chains, like Papa John's and Red Lobster, are increasingly turning to part-time workers to reduce their healthcare (and other) costs.

Labor and especially labor unions make attractive targets for blame, especially when they really aren't to blame.

Another example in recent news is Hostess Brands, makers of the (in)famous Twinkies, Sno-Balls, Cup Cakes, etc., filing for bankruptcy and closing its doors and laying off 18,500 employees, and blaming the intransigence of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union for the company's demise. If only those workers had accepted the 30% pay cut that the company had offered, we could all still be enjoying our Twinkies guilt-free. Sort of.

There's no mention of the fact that this is Hostess' second bankruptcy since 2009, nor that Hostess has not been making contractually-obligated pension contributions, nor that Hostess has been run by six CEOs in eight years, none of whom had bread or cake baking experience, nor that "despite their financial woes, the company’s CEO got a 300%  salary increase from $750,000 to $2,250,000, and other top executives received raises worth hundreds-of-thousands of dollars." (Reported by Politicus USA; full story, here)

It's time for a new labor movement. Where's Norma Rae when we need her?

Who's Responsible, the Corporation or the Executive?

Corporations have one big advantage over people: not only do they have, thanks to Citizens United, the right of free speech, but: it's really hard to put a corporation in jail.

Many of us have wished for corporate jails (as opposed to for-profit jails run by corporations), to which we could have sent, for example, the banks that nearly destroyed our entire economy. Alas, those don't exist, and it's extremely rare that individual executives get charged.

So I was interested but not particularly surprised to read yesterday that, as a followup to the horrific Deepwater Horizon explosion and oil spill two years in which eleven workers died, BP had finally agreed to plead guilty to numerous criminal charges and to pay more than $4 billion in fines and penalties over the next five years (article by Clifford Krauss and John Schwartz in yesterday's New York Times, here).

But what really caught my eye is that the Justice Department filed criminal charges against three BP executives in connection with the spill.

According to the Times report,

The government charged the top BP officers aboard the drilling rig, Robert Kaluza and Donald Vidrine, with manslaughter in connection with each man who died, contending that the officials were negligent in supervising tests to seal the well. 

Prosecutors also charged David Rainey, BP’s former vice president for exploration in the Gulf of Mexico, with obstruction of Congress and making false statements for understating the rate at which oil was spilling from the well.

Those charged are denying any wrongdoing.

Me, I'd want to charge BP's CEO, but that's just me.

Ironically, today's news included a report of an explosion and fire aboard another Gulf oil rig (Associated Press report, in the New York Times, here).  Thankfully, the rig was not producing at the time and there are no reports of oil leaking. No one was believed killed in the fire, although several had been seriously injured. At the time of the report, the Coast Guard was still searching for two missing workers.